On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-5980-77.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 2, 2009

Before Judges Sabatino and Simonelli.

Defendants Irwin and Ida Mae Crawford (the Crawfords) appeal from the April 4, 2008 Chancery Division order denying their motion to vacate a default judgment entered on September 18, 1978 in an in rem tax foreclosure action brought by plaintiff City of Newark (City). The Crawfords contend that the motion judge abused her discretion in denying the motion. We affirm.

The following facts are summarized from the record. On May 24, 1960, the Crawfords purchased two adjoining lots in Newark:

The Crawfords lived in a two-family home located on Lot 37, and parked their cars and an unused boat on Lot 36. In 1984, the Crawfords moved from the home, but their sons continued living there. It is unclear from the record when a chain-linked fence on Lot 36 was erected or who erected it. Although the Crawfords claim to have placed "No Parking" and "No Parking in Driveway" signs on the fence, it is also unclear from the record when they did so.

Beginning in 1975, the Crawfords failed to pay the taxes due on Lot 36. As a result, on December 20, 1976, the City purchased a tax sale certificate for that lot and recorded it on July 8, 1977.

On June 28, 1978, the City filed an in rem tax foreclosure complaint. It published a notice of foreclosure in the Star Ledger on June 30, 1978. On July 5, 1978 the City posted a copy of the published notice:

1. On a bulletin board in the basement of Newark City Hall;

2. In the main public office of the Tax Collector of the City of Newark;

3. On the bulletin board in the Essex County Register's vault;

4. On a bulletin board in the basement of the Essex County District Court, High Street, Newark, New Jersey; and

5. On the bulletin board in the main business office of the Sheriff of Essex County in the Essex County Court House, Newark, New Jersey.

In addition to filing the foreclosure complaint, the City filed a Chancery Abstract containing an affidavit of compliance with Rule 4:64-7.

The Crawfords concede that the municipal tax duplicate listed 51 Woodland Avenue as the mailing address for Lot 36. On or about July 5, 1978, the City attempted service of the foreclosure complaint on the Crawfords by ordinary and certified mail at 51 Woodland Avenue. The certified mail was returned unclaimed; however, the record does not indicate whether the ordinary mail was returned as well.

Default judgment was entered on September 18, 1978. On January 4, 1980, the City executed a deed transferring title to Lot 36 to Robert Mosley Jr. (Mosley). Mosley recorded the deed on April 30, 1980. The City regained title to the lot by an in rem tax foreclosure judgment entered on September 29, 1987. On October 21, 1988, the City executed a deed transferring title to the lot to Patrick Stewart (Stewart). Stewart recorded the deed on November 2, 1988.

On February 12, 1996, the Crawfords executed a deed purportedly transferring title to Lots 36 and 37 to their daughter for $1.00. However, the deed, recorded on February 13, 1996, only included Lot 37. Neither the Crawfords nor their daughter obtained a title search.

On March 29, 2004, Stewart executed a deed transferring title to Lot 36 to intervenor Rydame Investments, LLC. (Rydame). Rydame recorded the deed on May 6, 2005. On February 15, 2006, Rydame executed a deed transferring title to the lot to intervenor Sumner Properties, LLC. (Sumner). Sumner recorded the deed on March 20, 2006.*fn1

On or about February 23, 2006, the Crawfords received a letter from Sumner's attorney advising that Sumner owned Lot 36 and demanding that they cease interfering with Sumner's possession of the property. In June 2006, the Crawfords filed a complaint in the Chancery Division to quiet title, naming the City, Rydame and Sumner as defendants. Sumner and Rydame filed summary judgment motions, which the Chancery judge granted, dismissing the complaint with prejudice. The judge also permitted the Crawfords to file a motion to vacate the default judgment entered in the foreclosure action.

The Crawfords then filed a motion pursuant to Rule 4:50-1(d) and (f) to vacate the default judgment. They argued that the judgment was void because service of the foreclosure complaint was defective, and that due process required the City to send the notice of foreclosure to the addresses for both Lots 36 and 37 and to conduct a reasonable follow-up when the certified mail was returned. They also argued that Rydame and Sumner were placed on constructive notice of their ownership of Lot 36 by virtue of their "open, notorious, and unequivocal" use of that lot.

Reviewing the motion under Rule 4:50-1(d), Judge Klein found that the City complied with the due process standards existing in 1978 for notice of foreclosure and service of a foreclosure complaint. The judge also found that the City was not required to conduct any follow-up investigation. Accordingly, the judge concluded that the judgment was valid.

Reviewing the motion under Rule 4:50-1(f), the judge found that the Crawfords knew that they owned two lots and that they had a duty to make sure they paid the taxes for both lots. The judge also found that the Crawfords could have easily rectified the problem in 1996, by conducting a title search before the transfer of title to their daughter. The judge reasoned that such a search would have revealed that Stewart owned Lot 36 and would have avoided transfers to multiple subsequent innocent owners thereafter. The judge further found that Rydame and Sumner properly relied on title searches and affidavits of title that they had obtained upon their purchase of Lot 36. The judge rejected the Crawfords' contention that the presence of a 1962 Cadillac car (that had not been moved in seven years), and unused boat and "no parking" signs on Lot 36 constituted an "open, notorious, and unequivocal" use placing Rydame and Sumner on constructive notice of the Crawfords' ownership of Lot 36. Accordingly, the judge concluded that the equities did not afford the Crawfords any relief.

A decision to vacate a judgment is within the sound discretion of the trial judge, and is guided by equitable principles. Housing Authority of Town of Morristown v. Little, 135 N.J. 274, 283 (1994). An abuse of discretion only arises on demonstration of "manifest error or injustice." Hisenaj v. Kuehner, 194 N.J. 6, 26 (2008) (citations omitted). An abuse of discretion occurs when the trial judge's "'decision [was] made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'"

Also, "[o]n motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons . . . any other reason justifying relief from the operation of the judgment or order." R. 4:50-1(f). Under this "catch-all" provision No categorization can be made of the situations which warrant redress under subsection (f) . . . [T]he very essence of (f) is its capacity for relief in exceptional situations. And in such exceptional cases its boundaries are as expansive as the need to achieve equity and justice. [Court Invest. Co. v. Perillo, 48 N.J. 334, 341 (1966) (citation omitted).]

When determining a motion under Rule 4:50-1(f), the issue is not whether the judgment was right or wrong at the time of its entry, but whether the totality of the circumstances today renders its enforcement inequitable. See In re Guardianship of J.N.H., 172 N.J. 440, 476 (2002). However, such a motion must still be made "within a reasonable time[.]" R. 4:50-2. Reasonable time is also a totality of the circumstances test. See Moore v. Hafeeza, 212 N.J. Super. 399 (Ch. Div. 1986). With these standards in mind, we review the Crawfords' contention that Judge Klein abused her discretion.

"[P]rocedural due process applies where state law does not entirely extinguish the taxpayers' property interest until foreclosure." Montville v. Block 69, Lot 10, 74 N.J. 1, 8 (1977) (citations omitted). Therefore, "under both state and federal constitutional guarantees . . . where an owner's name and address appear on the municipality's tax rolls, notice must be sent by mail before a taxpayer's right to redeem his property may be foreclosed." Id. at 19-20 (emphasis original). The Court additionally noted that

[a]lthough not constitutionally impelled in this regard we concur that registered or certified mail, return receipt requested, should be utilized to notify a landowner of the foreclosure proceeding. If the letter is refused, or simply not accepted, notice by ordinary mail should be sent to that address and to the clerk of the court. [Id. at 20 n.9].

In 1978, a municipality was required to "publish once a notice of foreclosure in the newspaper generally circulated in the municipality where the lands affected are located[.]" R. 4:64-7(b) (1969) (amended 1994). A municipality also had to within 7 days after the date of publication of the notice of foreclosure, serve a copy [of the notice of foreclosure] . . . on each person whose name appears as an owner in the tax foreclosure list at his last known address as it appears on the last municipal tax duplicate. . . . Such service shall be made in the manner provided by R. 4:4-4(a) or by registered or certified mail, return receipt requested, to his last known address; or if the party refuses to claim or to accept delivery, by ordinary mail both to his last known address and to the Clerk of the Superior Court; or if no address is known, by ordinary mail to the Clerk of the Superior Court.

A municipality further had to within 15 days after the date of the publication of the notice, cause a copy thereof to be posted in the office of the tax collector of the [municipality] and in the office of the county recording officer of the county in which the land to be affected by the action is, and in 3 other conspicuous places within the taxing district in which the land is located.

[R. 4:64-7(d) (1969).]

Finally, a municipality had to file an affidavit "showing compliance with the publication, posting and service requirements of this rule." R. 4:64-7(e) (1977).

Here, we are satisfied that the City complied with all due process standards existing in 1978 for notice of foreclosure and service of a foreclosure complaint.*fn3 Neither Montville, Rule 4:46-7, nor other authority required the City to send notice of the foreclosure action to any address other than that listed on the municipal tax duplicate, or to conduct a follow-up investigation after the certified mail was returned.

Also, anyone who acquires title to property by paying valuable consideration is considered "a bona fide purchaser for value "without notice until the contrary appears." Venetsky v. West Essex Bldg. Supply Co., 28 N.J. Super. 178, 187 (App. Div. 1953). The burden to prove otherwise is on the party alleging that the purchaser had notice. Ibid. "'[C]onstructive notice may be just as effectual as actual notice, and . . . may arise from possession alone, but, in order to give it that effect, it must be open, notorious, exclusive and unequivocal.'" Michalski v. United States, 49 N.J. Super. 104, 108 (Ch. Div. 1958) (quoting Hodge's Executors v. Amerman, 40 N.J. Eq. 99, 103 (Ch. 1885)). However, this possession must involve acts that are "open and notorious acts of ownership as will naturally be observed by others, and the acts must be of a character so certain and definite in denoting ownership as not to be liable to be misunderstood or misconstrued." Ibid. (quoting Hodge's, supra, 40 N.J. Eq. at 103). If such acts occur, then a bona fide purchaser has a "duty to inquire of the one in possession concerning the right by which he occupies the premises and been held bound by knowledge which such inquiry would have revealed." Id. at 109.

Here, we are satisfied that the totality of circumstances do not warrant equitable relief to the Crawfords. Rydame and Sumner were bona fide purchasers of Lot 36 for value who had obtained affidavits of title and title searches prior to their purchases, which revealed a clear chain title. We are also satisfied that the Crawfords' placement of an old car, an unused boat and some parking signs on Lot 36 did not constitute constructive notice.

Finally, knowing they owned two lots, the Crawfords had a duty to make sure that taxes were paid for both lots. Their non-receipt of a tax bill for Lot 36 did not discharge this duty. See N.J.S.A. 54:4-64(a)(3).

Affirmed.

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